Introduction
TEPEZZA, a biologic drug developed by Horizon Therapeutics and now owned by Amgen following a $27.8 billion acquisition, is the only FDA-approved treatment for thyroid eye disease (TED), a progressive and potentially vision-threatening condition. Here, we delve into the market dynamics and financial trajectory of TEPEZZA, exploring its performance, challenges, and future prospects.
Market Position and Competition
TEPEZZA holds a monopolistic position in the TED market, as it is the only FDA-approved medication for this condition. This unique market position has allowed Horizon, and now Amgen, to charge premium prices, with a six-month course of treatment typically priced at around $350,000[4].
However, this dominance is not expected to last forever. Emerging competition from clinical-stage rivals is anticipated to challenge TEPEZZA's market share in the coming years. Despite this, TEPEZZA's current lack of direct competition has been a significant factor in its financial performance.
Historical Sales Performance
TEPEZZA has shown strong sales growth since its introduction. In its first full year on the market (2021), it generated $1.66 billion in sales, followed by $1.97 billion in 2022. However, recent quarters have seen a slowdown in sales momentum. For instance, in the third quarter of 2023, TEPEZZA sales reached $453 million, representing a 2% increase from the previous quarter but an 8% decline year-over-year[1].
Recent Trends and Initiatives
Despite the recent decline, there are positive signs. The number of TEPEZZA prescribers increased by more than 50% year-over-year, attributed to an April 2023 FDA label expansion that widened the eligible patient population by roughly 100,000 in the United States. Additionally, policy changes by payers have helped more eligible patients access the treatment[1].
Amgen is employing a strategy similar to what it used for Tavneos, another acquired drug, to boost TEPEZZA sales. This involves increasing awareness among endocrinologists and ophthalmologists through broader sales force engagement and reminder messaging. This approach has shown success with Tavneos, with sales increasing by 23% in the quarter to $37 million[1].
Financial Guidance and Projections
Horizon Therapeutics had initially projected high teens percentage growth for TEPEZZA sales in 2022, with global peak annual net sales expectations exceeding $4 billion. This includes U.S. peak annual net sales of over $3 billion and ex-U.S. peak annual net sales of over $1 billion, following plans to launch TEPEZZA in Europe[2].
Amgen's acquisition has integrated TEPEZZA into its broader portfolio, contributing to the company's overall financial performance. For 2023, Amgen raised its revenue projection to between $28 billion and $28.4 billion, partly due to the inclusion of sales from Horizon products[1].
Pricing and Revenue Impact
The high pricing of TEPEZZA has been a significant factor in its revenue generation. However, this pricing strategy also faces scrutiny and potential challenges from emerging competition and regulatory pressures. The wholesale acquisition cost of TEPEZZA is substantial, which can impact patient access and overall market dynamics[4].
Global Expansion
Horizon Therapeutics had planned to expand TEPEZZA's reach globally, particularly in Europe, which is expected to contribute significantly to its peak annual net sales. The company increased its ex-U.S. peak annual net sales expectations for TEPEZZA to greater than $1 billion, reflecting a broader assessment of the TED market opportunity outside the U.S.[2].
Impact of Regulatory Changes
Regulatory changes and payer policies have played a crucial role in TEPEZZA's sales. The April 2023 FDA label expansion and favorable payer policies have helped increase the number of prescribers and patient access to the drug. These regulatory and policy changes are critical for sustaining and growing TEPEZZA's market presence[1].
Field Force Expansion
The expansion of the TEPEZZA field force, initiated late in 2022, has driven positive momentum. This expansion has led to a 50% year-over-year increase in the number of ophthalmologists and endocrinologists prescribing TEPEZZA, with significant growth coming from ophthalmologists[5].
Financial Performance of Amgen
Amgen's overall financial performance has been strong, with total revenues in 2023 increasing 7% to $28.2 billion. The acquisition of Horizon Therapeutics contributed $954 million in sales in 2023, reflecting Amgen's commitment to expanding its portfolio through strategic acquisitions[3].
Challenges and Future Prospects
While TEPEZZA faces challenges from emerging competition, Amgen's strategies to increase awareness and expand the drug's reach are expected to mitigate these risks. The company's experience with Tavneos suggests that targeted marketing and sales efforts can significantly boost sales of acquired drugs.
Quote from Industry Expert
"We realized there was a low level of awareness of Tavneos," said Murdo Gordon, Amgen’s VP of global commercial operations. "We added reminder messaging to some of our broader rheumatology-covered sales forces to increase awareness of the data associated with Tavneos." This approach is now being applied to TEPEZZA, indicating a proactive strategy to maintain market dominance[1].
Key Takeaways
- Market Dominance: TEPEZZA is the only FDA-approved treatment for thyroid eye disease, allowing it to command high prices.
- Sales Performance: Despite recent declines, TEPEZZA has shown strong historical sales growth, with recent initiatives aimed at boosting sales.
- Regulatory and Policy Impact: FDA label expansions and favorable payer policies have been crucial for increasing patient access and prescriber numbers.
- Global Expansion: Plans to launch TEPEZZA in Europe are expected to contribute significantly to its peak annual net sales.
- Competition: Emerging competition is anticipated, but Amgen's marketing and sales strategies are aimed at maintaining market share.
FAQs
Q: What is TEPEZZA used for?
TEPEZZA is the only FDA-approved medication for the treatment of thyroid eye disease (TED), a progressive and potentially vision-threatening condition.
Q: How much does TEPEZZA cost?
A six-month course of TEPEZZA is typically priced at around $350,000.
Q: What are the key factors contributing to TEPEZZA's sales decline?
Recent sales declines have been attributed to various factors, including increased competition and the need for greater awareness among prescribers.
Q: How is Amgen planning to boost TEPEZZA sales?
Amgen is using a strategy similar to what it employed for Tavneos, involving increased awareness efforts among endocrinologists and ophthalmologists through broader sales force engagement and reminder messaging.
Q: What are the global peak annual net sales expectations for TEPEZZA?
Global peak annual net sales expectations for TEPEZZA exceed $4 billion, with U.S. peak annual net sales expected to be over $3 billion and ex-U.S. peak annual net sales expected to be over $1 billion.
Sources
- FiercePharma: "Amgen lays out plan to boost sales of newly acquired Tepezza"[1]
- BioSpace: "Horizon Therapeutics plc Reports Third-Quarter 2022 Financial Results"[2]
- Amgen Investors: "SHAREHOLDERS 2023"[3]
- FTC: "Amgen Horizon Part III Complaint PUBLIC"[4]
- BusinessWire: "Horizon Therapeutics plc Reports Second-Quarter 2023 Financial Results"[5]